If you're new here, this blog will give you the tools to become financially independent in 5 years. The wiki page gives a good summary of the principles of the strategy. The key to success is to run your personal finances much like a business, thinking about assets and inventory and focusing on efficiency and value for money. Not just any business but a business that's flexible, agile, and adaptable. Conversely most consumers run their personal finances like an inflexible money-losing anti-business always in danger on losing their jobs to the next wave of downsizing.
Here's more than a hundred online journals from people, who are following the ERE strategy tailored to their particular situation (age, children, location, education, goals, ...). Increasing their savings from the usual 5-15% of their income to tens of thousands of dollars each year or typically 40-80% of their income, many accumulate six-figure net-worths within a few years.
Since everybody's situation is different (age, education, location, children, goals, ...) I suggest only spending a brief moment on this blog, which can be thought of as my personal journal, before delving into the forum journals and looking for the crowd's wisdom for your particular situation.

I am not really a big fan of lists of tips of “small actionable steps”. While fun, at least as long as they’re short, I don’t find such lists very helpful(*), mostly because they either list things I’m already doing (turn the light off hen you leave the room) or things that do not apply (clip coupons). The tips I enjoy the most are the “maybe you should look into this”-type of tips. Pointers that would require some research on my part but which I would not otherwise have thought of myself in a million years or maybe two or three years anyway 🙂 .

(*) I am well aware that for people just jumping into the subject of personal finance such lists can be immensely motivating and empowering and so they are very useful at the transition/recruitment stage. However, once one sees the principles behind the lists, they become less useful and almost trivial.

With that caveat in mind, here are my tips for extreme early retirement.

Ordinary personal finance is much too restricted to consider discussing retiring early or gaining any kind of financial freedom; it will mostly tell you how to gain promotions, set up retirement plans, pay down mortgages and car loans, and get benefits and other things that keep people bound to their jobs. To understand how you fit into the larger scheme, read books on economics (like McConnell and Brue) and ecology (like Richard Brewer) and try to apply the ideas to your own life.

Everything you need to know about functional minimalism can be learned from good boat keeping for passage making and blue ocean cruising. Some of these people cruise the world on their own ship for down to $6000 a year.

Become a strategist. It is much more important to do the right things compared to doing things right. Normally the suggestions are to read Sun Tzu or Musashi, but I think you will be way better off with a few textbooks on operations management. Pay particular attention to kaizen, just-in-time (inventory management), the fifth discipline (the systems approach), and total quality management.

Do at least one major thing different from everybody else (for instance, I don’t have a driver’s license). If you are going to retire 20 years before everybody else, you might as well get used to being different. Always leave your comfort zone. Remember: Comfort is nothing compared to freedom (at least for a small percentile anyway 😛 ).

Find a neutral hobby and become skilled enough at it to make money on it (you need to put in about 1000 hours before that happens). Everything I’ve made money on after retiring [from] my career started as hobbies. It does not matter if you are not earning a lot or nothing at all in the beginning. The important thing is that is has a reasonable chance to make you something whether it is money or connections. For instance, jet skiing is disqualified but knitting is in.

PS: Sorry for being a bad blogger lately. We’re busy working on a seven figure R&D grant proposal for a new power plant design to decrease (y)our dependence on oil imports.

I was going to complain about the lack of posts, but it sounds like you’ve been putting your time to good use (not that I would expect much else).
I’m more curious about these possible hobbies. I’m having a hard time coming up with a very long list so it may be an area to expand on (though I know you dislike lists).
I currently bake a fair amount of our bread but that is really the only thing I’ve got, and I’m not sure about making money off that in the long term, though I’ve become pretty impressed with my bagels lately.

@Philip – Small world! I haven’t read that one, but the Principles of Ecology is the best book on ecology I have ever read.

Seth Miller said,

Oh I should have been more clear. I only make breads, not cakes or sweets, but I should look in to contests for breads.

Jan said,

> I think you will be way better off with a few
> textbooks on operations management. Pay
> particular attention to kaizen, just-in-time
> inventory management), the fifth discipline
> (the systems approach), and total quality
> management.

Any particular book(s) you’d recommend for a complete novice?

Jacob said,

@Jan – Not really, I just discovered the field recently. Try D. T. Johns and H.A. Harding.

I am just wondeing, if your blog is your hobby as well, are you making any money off it? I don’t see any ads.. Although I could tell you that could be making at least 200-300 /month from your blog ( which is half of your projected expenses for one year, right?

Steven Austin said,

on strategy….Lao Tzu Tao Te Ching; and John Boyd A Discourse On Winning And Losing

You bring up some good points. Particularly about how standard run of the mill personal finance is not going to get you to financial freedom. This has been one of the most crushing discoveries in my own personal finance journey. That even if I do everything right I’m going to be stuck with an uninspiring 9-5 job for decades to come. Of course, I could luck out and wind up with an awesome job, but my life usually doesn’t seem to work that way.

I’ll admit to being a dork who reads textbooks for fun so maybe you could list some of the better books that you’ve read on operations management that you’ve alluded to in point 3.

I am convinced that I need to do something different and out of my comfort zone. At this point I don’t really know what that something is, but I’m searching for it.

Chris said,

What, you don’t have a drivers license? Not that there’s anything wrong with that, but you live in an RV no? I seem to remember a post where you said you drove somewhere to get propane tanks or whatever. 😉

George said,

Chris beat me to the punchline 🙂

Inquiring minds want to know!

Kevin M said,

#3 is great and something I really need to work on. I get too caught up in the day to day operations of life that it’s hard to see what’s ahead sometimes. I have an idea of where I want to go though, so I guess that’s a start.

Good luck with the proposal by the way.

Jacob said,

@Blogging Banks – Thanks for the estimate – it’s similar to what I would have guessed it at. I have been thinking about, but admittedly, I just don’t want to deal with it at that level. Also, I think if it turned into a source of income, I could easily come to depend on it, and then I would be obligated to keep writing and start thinking in terms of traffic rather than ideas and that would suck, for me.

@Chris, George – I admit it makes no sense. I have a Danish driver’s license, good until 2045 (the test is bloody hard over there so once you got in, you don’t have to do it again), and it works in the rest of the world as long as I’m not a resident, so technically, the only place I can’t drive is California. As you know, I hate driving, so I have avoided getting a license thus far (I get rides for long distances, but I don’t go anywhere very often). Living in an RV this makes no rational sense at all other than the fact that even if I got the license, I probably wouldn’t be driving anyway and thus lose whatever routine I may build up. So DW drives the RV and the propane fill up is like 2 miles away. Without driving, I would get a frame backpack and walk a 30lb external tank over instead, no problem.

Kelly said,

I know this is an old post, but I’m curious how it worked out with the grant application and new power plant design.

jj said,

Have you ever thought of moving to a country that is poorer than USA/California. For example poor African/Asian countries you can find housing for $100/month and given you do not rely or need other services that a developed country readily provides (education/healthcare etc). You don’t have to live like a “near” homeless inside a car and have a very decent living standard and enjoy life/freedom?

Jacob said,

@jj – I haven’t thought much about moving to another country. I already enjoy a greater deal of home ownership than someone who rents a house or has a mortgage regardless of which country it is located it. Nobody can kick me out of my home. If regulators hassle me, I can move my home to another state. I can even move it to rent free locations (for example, national parks). I consider a home that is anchored to a fixed location somewhat of a liability. That said, some feel differently and there’s certainly some geoarbitrage going on; others value a house with a foundation where they can live in the same place for 40 years. I just prefer to live in a place where I speak the language fluently and where I somewhat fit in with the local culture and Silicon Valley works for me; also I prefer to move around every few years.

Diane said,

Thanks for giving me an excuse not to apologize for my hobby of shoemaking. I’ve actually got one person begging me to teach a class. Perhaps this hobby will pay off someday.

#2 reminds me of the books and show “Horatio Hornblower”, as the shipmen only had 1 chest for their uniforms, maps, instruments, boots, and sword to carry from ship to ship, years or careers at a time. Maybe i should bring a chest into my home and find out what is really important for living. Then I could be a lot more mobile. I did see your post on fitting everything vital into your carry on luggage bag. Very inspiring for True Freedom!

A fun and great hobby is creating autonmous, self sefficient shelters from mostly scrap and “trash”. Water purified Cistens and showers with a grey system. Solar panel/wind farm systens for high power tools and many subsystems for security or entertainment. The sky is limitless! Once built initially, it can maintain itself and is very useful and functional, much like the Earth’s biosphere!

Whatever hobby you master, make a business model out of it! Even if it only makes you a positive cash flow of $1 per year, the millions in stock that you own for being founder could potentially make you billions of $ once your principals of reducing to bare minimal expenses and increasing efficiency or turn-key production take hold in the Company you created. Your earnings could start increasing exponentially and so will the worth of your millions in stocks of your company. To get start up money, advertise your company brand and model to venture capitalists once you have proven a positive cash flow and potential for more. It’s like making something out of nothing, just by saying you have something amazing (which your 1000 hours of hobby really is something amazing, just not appreciated yet by the world). Think about it, Mark Zuckerberg had over a 1000 hours of programming behind him in his hobby, and created a simple php script from an idea he took to the next step. He kept things simple and exclusive, without advertising right away, and it become Facebook, that just went IPO and made him and other’s billionaires (though it’s just a website.)

Robert said,

Do you have any reading tips on your boat keeping advice?

Nigel said,

I came across your blog/website a few months ago and have started to immerse myself in your ideas. I have also those gleaned from some of the blog links, including anything adapted to the UK where I am based. Adapting strategies and concepts to each individual’s situation and location makes a lot of sense. You mention above and in your book about learning from sailing/cruising methods. Do you have any books or blog sites which you would recommend?

[…] My top 5 tips to becoming an extreme early retirement expert (Early Retirement Extreme) – I should dig into resources for boat keeping / provisioning to learn more. […]

Gravity's Rainbow said,

@Jacob In relation to point number 2 here, and taking that to the next level, I wondered if you are familiar with the microcruising concept at all? This really amazed me when I found out about it a few years ago, some of these boats are tiny and uber minimalist but looks like great fun. Seems to be plenty of debate about the minimum size needed to be safe for that kind of passagemaking etc. I respect the people who build and pilot them.

My only boat was partly restored by myself but was an expensive to run second hand imported speedboat. My only real luck in that was fluking my way into selling it on to the right person at the right time for more than I had put into it which for a boat is a hard thing to do!

I remember my father before when he was in his early 40?s, he already planned about his retirement. He had some investments, he looked for an income property that when the time he will retires he will have some passive income. Planning ahead is the best key to a successful retirement and to enjoy your life ahead.

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